Prickly Credit Cards and Poor Credit
February 1st, 2008You receive an offer in your mail that sounds good, maybe it’s a new generation TV or a fridge. But it costs $2000. Oh, but you have a credit card with a $5000 limit, and you immediately purchase your merchandise. You’ve just entered into the prickly porcupine zone. Here’s what will happen next… Most credit cards charge a minimum of total balance (usually 2 percent) of the total per month. Assuming the interest rate is 18 percent and you choose to repay the minimum amount of $40, $30 of that will go towards interest and only 10 percent towards the principle. As a result, you will take 30 years to repay and end up paying over $5000 interest.
For ways to get out of this prickly credit card situation, visit the Karma of Success blog and read the article titled, “Credit Cards Poor Credit and Porcupines.”
